TAG Oil Blog

There hasn’t been much blog news from the field lately, sometimes geology and science can be quiet, solitary stuff. But we’re pleased to report that as of October 2014 TAG achieved record monthly production of 1,990 BOE (76% oil) per day.

And now with the Nova-1 drill rig back in Taranaki we’ve resumed the next wave of development, appraisal, step-out drilling, and field optimization work in our Taranaki oil and gas fields.

We’re kicking off this portion of TAG Oil’s Taranaki drilling campaign with the Cheal-E-JV-6 and the Cheal-E7 wells, acreage that we believe is prospective for high productivity wells. The strong production performance of Cheal-E1, Cheal-E4, and Cheal-E5 makes further development of the Cheal-E site particularly compelling.

When finished, the Nova-1 drill rig will move to our Sidewinder oil and gas field to target the oil potential identified from oil shows encountered in TAG’s six Sidewinder gas wells. This acreage borders the Ngatoro/ Kaimiro field, which has been producing for 31 years, and still has millions of BOE’s of recoverable reserves remaining.

Cardiff-3 Deep Uphole Completion Update

After further technical analysis of Cardiff-3’s lower K3E zone (which returned gas and condensate but at uneconomic rates), TAG is now in the planning stages to production test the primary uphole zones, the McKee and K1A Formations. These are both producing formations in large fields along trend to the Cardiff prospect.

We realize that we post a lot of pictures of our oil and gas permit sites here on the blog, and write press releases about our drilling process, the status of different exploration sites, production numbers, and estimated potential. Further, we talk a fair bit about how we use the safest, most environmentally conscious techniques, many of which we’re the first to bring to New Zealand.

But talking about it isn’t the same as showing it.

So talented New Zealand video firm buildmedia recently put together a few videos that bring TAG Oil’s work to life. This first one is particularly exciting, as it shows TAG’s process from scoping to siting to drilling to production, all within the context of the actual landscape…above ground and below!

Over the next few weeks, we’ll release the other two videos, which you’ll also find posted to our website. Hopefully, you’ll enjoy and learn simultaneously. As buildmedia’s tagline says, “seeing is believing.”

We've been not so patiently awaiting the results of the independently conducted Reservoir Characterization Study (RCS)on TAG Oil's East Coast Basin, unconventional Ngapaeruru-1 well, and it has finally arrived.

This RCS study provides the first true unconventional data set ever acquired in the East Coast Basin, and the quality ofthis state-of-the-art data set provides the first specialized interpretation necessary to unlock the major oil and gaspotential of TAG's East Coast Basin unconventional play.

As our team had hoped, the study confirms that oil is being generated in the Whangai source rocks, as well as a numberof critical positives showing the Whangai to be a viable unconventional oil target. Not that it's a surprise to us,but independent confirmation is always good. (This is a studio shot of our oil-rich Whangai shale, above.)

A few highlights include:

- Analysis places the Whangai source rocks in the oil/condensate window, correlating well with the 50-degree API oilseeps in the basin

- The Whangai Formation has very low clay content, indicating fracture stimulation can be highly effective

In order to prove the viability of moveable hydrocarbons from within these source rocks and the economic viability ofthis unconventional play, TAG can now move on scheduling perforation and production testing of Ngapaeruru-1.

For more detailed information, see our recentQ3 press release. And stay tuned for what happens next!

Cheal-E continues to provide good news, with three wells cased as potential oil wells – one of which is being flow tested – and Cheal-E 4 now drilling ahead.

To ensure more reliable production forecasting on future wells, we’re following a protocol of initially testing each well individually: with each flowing for approximately 15 days, and then shut in temporarily to conduct pressure and temperature analysis. During this shut-in period, the next well will be placed on a 15-day production test until all new wells at the site have been individually tested and build-up analysis completed.

During its initial 5-day flush period Cheal-E1 was testing at 600 BOEs a day, about 90% of that oil, flowing naturally without the aid of artificial lift. We know that will settle down to a more typical Mt. Messenger well average over the course of the next year, but considering the fact that Cheal E represents a substantial extension of our known oil saturation area at Cheal, we’re fully pleased with the results, and happy to be getting the proceeds from the sale of all that oil.

We put together a simple table to bring you up to speed on TAG’s Taranaki Basin oil and gas producing and drilling activity. The table includes producing oil and gas wells, wells in development (some awaiting workover operations as well as improvements in production infrastructure, to bring additional production that’s currently sitting behind pipe, on-stream), and our next condensate targets to be drilled. Status will change quickly, but here’s a snapshot of how TAG Oil's drilling and workover program stands now.

Taranaki Shallow Drilling and Workover Program

Cheal A

A1

Behind pipe awaiting infrastructure expansion

A2

Waterflood workover

A3X

Producing

A4

Waterflood workover

A7

Behind pipe awaiting workover

A8

Behind pipe awaiting infrastructure expansion,

A9

Drilled, awaiting test

A10

Drilled, awaiting test

A11

To be drilled

A12

To be drilled

Cheal B

BH1

Producing

B1

Behind pipe awaiting workover to initiate Urenui Production

B2

Behind pipe awaiting workover to initiate Urenui Production

B3

Producing

B4ST

Producing

B5

Flowing 800 to 1300 bbls/day

B6

Testing

B7

Flowing 800 to 1075 bbls/day

Cheal C

C1

Producing; oil being trucked to the Cheal Production Station

C2

Excellent flow test results, behind pipe awaiting workover

C3

To be drilled

C4

To be drilled

Sidewinder

SW1 - SW4

Producing 2 to 3 million cubic feet of gas per day (350–500 boe/day), and 30 to 50 barrels of light oil / day. Permanent tie-in completed. Anticipate 8 to 10 million cubic feet of gas per day once compression installed.

We’ve tested a conservative range of low draw-down configurations at Cheal BH-1, with production rates from 400 to 500 barrels of oil equivalent (BOE) per day. Predominantly oil with no water, just how we like it.

We’ll keep testing the full production capabilities of Cheal-BH-1 with the goal of optimizing daily flow rates and maximizing long-term reserve recovery, but this alone is great news.

Done with our 10-day sustained Sidewinder-1 production test and it’s all good. We drilled to a depth of 1601m and encountered 14 meters of net (22m gross) oil and gas bearing sandstones.

We achieved stabilized flow rates of 8.5 million cubic feet of gas plus 44 barrels of oil per day for a total of 1461 barrels of oil equivalent (“BOE”) per day, with a flowing tubing pressure of 940 psi. The 4-Point Isochronal test indicated a tubing restricted maximum gas flow rate of 13 million cubic feet per day (2167 BOE’s/day).

This may be a flow rate record from the Mt. Messenger Formation. Better still, we’ve ID’d several other lookalike prospects to drill within the permit, many accessible from the same Sidewinder surface location. Time to commercialize this discovery and initiate oil and gas production.